The oversight role of regulators : evidence from SEC comment letters in the IPO process
Research output: Journal Publications and Reviews (RGC: 21, 22, 62) › 21_Publication in refereed journal › peer-review
Author(s)
Related Research Unit(s)
Detail(s)
| Original language | English |
|---|---|
| Pages (from-to) | 1229-1260 |
| Journal / Publication | Review of Accounting Studies |
| Volume | 22 |
| Issue number | 3 |
| Online published | 29 May 2017 |
| Publication status | Published - Sep 2017 |
Link(s)
Abstract
This study investigates how regulatory oversight affects the price formation of initial public offerings (IPOs). We provide evidence on the oversight role of the US Securities and Exchange Commission (SEC) by examining the effects of comment letters issued by the SEC in the process through which companies are initially listed. We find that IPO issuers reduce their offer price if they receive comment letters. The reduction in price from the IPO filing date to the final issue date is greater when the IPO firm has more correspondence with the SEC. The pricing impact of SEC comment letters is more pronounced for IPO issuers with greater hyping incentives. Moreover, we find that IPO firms that receive more comment letters have similar levels of underpricing and outperform over the long run after the issue date, compared with IPOs with fewer comment letters.
Research Area(s)
- Disclosure, Hyping, Information asymmetry, Price formation, SEC comment letters
Citation Format(s)
The oversight role of regulators : evidence from SEC comment letters in the IPO process. / Li, Bing; Liu, Zhenbin.
In: Review of Accounting Studies, Vol. 22, No. 3, 09.2017, p. 1229-1260.Research output: Journal Publications and Reviews (RGC: 21, 22, 62) › 21_Publication in refereed journal › peer-review
